Share scheme reporting, Non-resident landlords scheme, ATED reporting

This newsletter looked ahead to the next tax form filing deadlines. July brings two deadlines for share scheme registration and reporting, which is particularly complicated this year. The non-resident landlord scheme annual return must also be made by 5 July. Finally don’t forget the more pressing deadline for ATED return forms on 30 April 2015!

Non-resident landlords schemeThe non-resident landlords scheme (NRL) has been in place for many years, but it still comes as a surprise to property owners who move abroad, and to many letting agents who ought to know better.

The “non-resident” condition for a landlord to fall under the NRL is not aligned with the statutory residence test which determines whether person is not resident in the UK for tax purposes. A landlord is non-resident for the NRL if his normal place of abode is outside the UK. An absence from the UK for as little as six months can make the landlord fall under the NRL (see chapter 2 of NRL guidance), but that person may be still technically resident in the UK for other tax purposes.

Unless the landlord has approval from HMRC to receive their rent gross, basic rate income tax must be deducted from rents paid to the landlord by the agent, or where there is no letting agent, by the tenant. The letting agent or tenant must make an annual report (form NRLY) to HMRC by 5 July 2015 for the year to 31 March 2015, and also account to HMRC for the tax deducted each calendar quarter.

This year HMRC are not sending out reminders to letting agents to complete NRLY, so this will be an easy deadline to miss. Interest will be charged on the late payment of tax by agents, and penalties are due for errors in returns.

An application to have rent paid gross must now be made online using an interactive PDF form NRL1i (for individuals), NRLi2 (for corporate landlords) or NRL3i (for all trustees). The rent must only be paid gross once permission is granted by HMRC, and that permission will only be back dated to first day of the quarter in which the application is approved.

This is an
extract from our tax tips newsletter dated 16 April 2015. The newsletter
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